Once you fix Gulliver's body (lung and heart); you'll be told the location of the sword.Maybe it's time to join Esther's head and body now.Also a possible lung needs to be repaired yet. (You already have this).

As for the pickaxe - when you complete fixing Gulliver's body - you can go to Fiery Mt and anew set of clues, items and puzzles await.

I had already joined Esther's head and body, and had the glued bellows. I still have a hole in the bellows so I can't give them to Gulliver. I took another walk around trying things but not getting anywhere.

Thank you MaG. I finally found it. I have looked and looked and looked. Before I posted for a nudge I was going to just read the w/t and did see this part about the piece of leather (so I had an idea where to look around) but figured I must have picked it up previously and used it since I wasn't finding it. Changed my mind about reading the w/t because I didn't want to see an answer that I wasn't looking for yet so never saw what to do with the leather.